The future of single-copy sales

Folio: The Magazine for Magazine Management, April 1, 1992 by John Harrington

Several years from now, when the entire magazine industry is universally regarded as one of the most profitable of all businesses, the newsstand sector will take pride in the fact it led the rest of the industry out of the doldrums of the early nineties.

The 1980s saw newsstand dollars, as reported by Council for Periodical Distributors Associates (CPDA), grow by more than 100 percent. Most wholesalers' title files grew during that period from approximately 1,800 to nearly 3,000. This proliferation of titles spurred unit growth by nearly 10 percent, even though most of the major titles showed unit declines.

However, by the end of last year, for the first time in the post-World War II period, newsstand dollars fell. Dollar losses and unit fall-offs of as much as 10 percent in some areas continued through 1991.

It is amazing how quickly a few bad months can ruin people's spirits.

And now, the good news

Although the first two quarters of 1991 were down, the third quarter saw dollar increases of just over 3 percent, which probably means flat - or nearly flat - units. An incomplete look at fourth quarter numbers shows even better growth, probably enough to push units to positive levels.

It is worth noting that wholesaler numbers reflect many more titles than are part of Audit Bureau of Circulations (ABC) numbers - regional publications, one-shots, specials, and a long list of non-advertising-driven books. Estimates, in fact, are that the non-ABC-audited sales amount to as much as 20 percent of total volume.

This newsstand resurgence is occurring while advertising is still soft and subscription marketing is challenging, to say the least. Will the turnaround last? It is probably too early for definitive answers, but there are positive indicators:

* Retailers have been showing a new interest in magazines. Even at the lowest point of the sales line, wholesalers did not report any great waves of complaints from retailers. Why? Probably because magazines were still doing better than most other products.

* The recessionary mood of the public has also made magazines look like a good value. They are relatively inexpensive forms of information and entertainment, and they offer tremendous variety.

* The renewed, or even new, interest in retail sales of magazines has not been limited to supermarkets (where more than 50 percent of magazine retail sales already takes place). Rather, mass merchandiser interest is picking up. Several years ago, in conjunction with the Magazine Publishers of American, CPDA issued a series of direct product profit (DPP) studies, one of which focused on mass merchandisers. The report, prepared by consultants Deloitte & Touche, demonstrated that magazines were underspaced and undermarketed by mass merchandisers. That report alone did not turn on the light for the mass-merchandiser community, but wholesalers do report expanded space in a variety of mass-merchandisers chains, large and small.

* Wholesalers also report growing enthusiasm from deep discounters such as office-supply stores, home-improvement centers, discount drug stores, and others. Large warehouse type accounts, with extraordinary traffic flows, are interested in magazines both for the sales they represent and the support they offer to the products the stores sell.

Retailers like title-list growth

One of the key elements in generating this enthusiasm on the part of retailers is the broad range of subjects that magazines address. This is one of the factors that expanded the title list by more than 5 percent in the eighties. While space for display grew, it certainly did not expand by anything near 50 percent.

The title-list growth evokes varying responses. Wholesalers are generally thankful, seeing it as the most important contributor to unit growth, although it also added to an already outrageous return rate. On the other hand, many publishers, particularly category leaders, feel that title proliferation has hurt their performance. They're probably right, but wholesalers suspect that it there were only three titles in a category, as opposed to six, that, while the individuals titles may do better, the total category performance would still be less.

Nor do title files show any signs of slowing their growth in the nineties. It may hurt the performance of some of the best titles, and it may cause higher returns, but it does provide the wholesalers with some additional security, and publishers with a measurable and cost-manageable means of entry to the market.

Better feedback on the way

By the mid-nineties, the newsstand business will be notable for one major difference from today, however. There will be a wealth, most likely even an abundance, of data available.

Wholesalers and publishers are today cooperating in the development of Periodical Retail Information Management, or PRIM, which will be a data bank of magazine retail-sales information, gathered from the computer filed of wholesalers. It will provide publishers and national distributors reports much more quickly and accurately. Operating under the management of publishers, wholesalers, and retailers, PRIM should solidify the entire distribution chain, the elements of which today more often feel isolated than linked together.